One defining characteristic of pure monopoly is that
A) the monopolist is a price taker.
B) the monopolist uses advertising.
C) the monopolist produces a product with no close substitutes.
D) there is relatively easy entry into the industry, but exit is difficult.

Question

Quizplus · Accepted Answer

A pure monopoly is defined by the lack of close substitutes for the monopolist's product. This gives the monopolist significant pricing power and the ability to earn economic profits in the long run. Choices A, B, and D do not accurately describe the characteristics of a pure monopoly. A monopolist is not a price taker, they use their market power to set prices. Advertising is a common tactic used by firms in all types of market structures, not just monopolies. Finally, a key characteristic of a monopoly is that entry into the market is difficult, not easy as described in choice D.

One Defining Characteristic of Pure Monopoly Is That